The Fed has been been throwing band aid’s on the financial sector for months, ever since the two day period where I rode Lehman (LEH) for 60+% but alas, what is going to happen to the financials is going to happen to the financials.

It is my humble opinion that the goverment needs to, and probably will eventually, let a major bank or two fail and take over Fannie and Freddie’s assets, because it is also my opinion that the debt, once cleared up, will allow new origination of loans followed by a rise in the economy that eventually will make the United States Government money.

This, however, is not the reason I am short Fannie May , FNM , the reason I am short is that in the next week or two I expect a Bear Sterns (bsc) esque panic. I also expect a quick drop after 5$ as there will no longer be joe shmoe internet trader in it as a short, and I expect margin call’s on Fannie longs to start hitting and causing the stock to get roughed up to the point where the stock is down to two and at that point the goverment will come in and buy it up, and heres the kicker, if Russia wants their debt in the companies paid for, they will have to pull out of Georgia.

After all, the fed can always print money.

When